Igor Golovniov | Lightrocket | Getty Images<\/p>\n
A day after closing out a blockbuster three months on Wall Street, high-flying chip stocks suffered steep declines to open the third quarter. <\/p>\n
Memory maker Micron<\/a> dropped 11%, wiping out $138 billion of market cap. Intel<\/a> fell 9% and rival chipmaker Advanced Micro Devices<\/a> dropped 7%. <\/p>\n Those three stocks boomed in the second quarter, adding $2 trillion in combined value<\/a>, as investors wagered that the artificial intelligence buildout would require an ever-increasing amount of memory as well as more central processors, rather than just the graphics processors made by Nvidia<\/a>. <\/p>\n The\u00a0VanEck Semiconductor ETF (SMH)<\/a>, an index that tracks chip stocks, fell more than 5% on Wednesday, a day after closing out the fund’s best quarter ever, jumping 71% from the start of April through the end of June. <\/p>\n Other big decliners on Wednesday included semiconductor equipment names Lam Research<\/a>, KLA Corp<\/a>. and Applied Materials<\/a> which all more than doubled in the second quarter. They all fell at least 10%.<\/p>\n One drag on the market was a report that Meta<\/a>, one of the biggest buyers of AI infrastructure, may be looking to rent out excess computing capacity<\/a>. That raised fears that AI processing supply may be catching up to demand. <\/p>\n Meta is among a small group of so-called hyperscalers, internet companies that are spending hundreds of billions of dollars a year building out AI data centers. The move was viewed as a positive for Meta, which gained over 9% on Wednesday after a lackluster second quarter. <\/p>\n Analysts at KeyBanc Capital Markets who recommend buying the shares wrote in a note to clients that the move positions Meta “more into the enterprise side of the market, which could provide more immediate” return on investment. <\/p>\n Richard Saperstein, chief investment officer at Treasury Partners, said he would “stick with the hyperscalers” as the market recognizes their strength in the AI trade. <\/p>\n “Earnings are accelerating, yet multiples are compressing,” Saperstein said on CNBC’s “Closing Bell.” “All I can attribute that to hyperscalers have been valued as capital intensive and asset-heavy versus asset-light.”<\/p>\n Whatever concerns may be seeping into some of the infrastructure stocks, they have little to do with the most recent financial results. Micron last week reported<\/a> a more than quadrupling of revenue in the latest quarter, while its gross margin, the profit left after accounting for the cost of goods sold, jumped to 84.9% in the third quarter from 39% a year earlier.<\/p>\n